Calgary

Forecasters expect energy market volatility to continue in 2019

"I'm not going to sugar coat it — we are going to have less investment in Western Canada than we've had for the last couple of years and it’s going to be a challenging year,” said Jackie Forrest, senior director of research with the Arc Energy Research Institute.

'It’s going to be a challenging year,' says senior director of research with Arc Energy Research Institute

Paul Smith and Jackie Forrest both think volatility will continue into 2019. (Colleen Underwood/CBC)

Some energy experts are predicting even more volatility in 2019 with respect to the financial markets.

More than 1,000 people gathered at the 42nd annual Forecaster Dinner at the Telus Convention Centre in Calgary on Thursday,

"I'm not going to sugar coat it — we are going to have less investment in Western Canada than we've had for the last couple of years and it's going to be a challenging year," said Jackie Forrest, senior director of research with the Arc Energy Research Institute.

"But I do think companies are going to innovate, they're going to figure out how to lower their costs, how to create as much cash flow as they can, and continue to grow into the 2020s, putting this year behind us once we get there."

There's been a lot of volatility over the past few months.

The price of oil plunged on Christmas eve.

The price differential on Canadian oil led to  government imposed production cuts.

And drilling activity is down.

Keynote speaker Paul Smith addressed the crowd at the 42nd annual Forecaster Dinner at the Telus Convention Centre. (Colleen Underwood/CBC)

"[Oil prices] have been very volatile over the last two to three years, the last time I was in Calgary was actually in January 2016 when the oil price was $30," said Paul Smith, president and CFO of CFA Institute, the professional body for investment managers.

"Since then it's been up to $75, it's back down to $50 more or less today, so it's been a very bumpy ride, which means it's very hard for businesses here in Calgary to plan, because you don't know what your income is going to be with any great degree of certainty."

And Smith said that volatility could continue.

"There's a very strong sense the volatility is going to continue, yes," he said.

"The old joke in our business is, the only thing you know about the oil price is it will either go up, down or sideways, but not necessarily in that order."

Forrest expects market access to improve over the next two to three years.

But she says companies can't sit around and wait for pipelines — they need to become more efficient in order to survive.

With files from Colleen Underwood